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Mortgage Glossary

Amortization

The gradual reduction of your loan balance through scheduled periodic payments. For mortgage balances, payments are generally made every month. A portion of the payment goes to the loan principal and a portion goes to the interest. An amortization schedule shows the balance after each payment is made.

Amortization Term

The amount of time you have to repay the mortgage loan. It is usually expressed in months. For example, the amortization term for a 30-year mortgage is "360 months" (12 mo/yr x 30 yrs).

Annual Percentage Rate

The cost of your mortgage loan expressed as a yearly rate. The components that are used to formulate the APR are, Note Rate — The stated interest rate, Points, Per Diem Interest - The daily interest charged on your loan from the day of closing to the end of the month, Other Applicable Fees — PMI, etc, The APR does not affect your monthly payment — amortization is computed on the note rate.The cost of your mortgage loan expressed as a yearly rate.

Appraisal

Your lender may require that you get an appraisal, a professional analysis of your property and neighborhood to determine the approximate value of your home. The appraisal fee is the amount charge for the appraisal. The amount that you're eligible to borrow is based largely on your property's appraised value.

Appreciation

An increase in the value of your property because of positive events, such as favorable changes in market conditions or enhancements made to the property.

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